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Riding on the wave of President Xi’s visit, CMC to march into European sports market?

By He Lanying 22 Oct 2015

Chinese President Xi Jingping will pay a visit to the headquarter of City Football Group (CFG) in Manchester on October 23 during his State Visit and Chinese media mogul Li Ruigang will be accompanying Xi’s visit to the club. 

As chairman of China Media Capital (CMC), which has close business ties with CFG and Mubadala, he is believed to unveil his plans for European sports market. 

Interest in Formula One

According to Sky Sports, CMC is in talks to invest hundreds of millions of pounds in an $8.5bn (£5.5bn) takeover bid for Formula One. When Mr. Li Ruigang was asked about the news authenticity of his involvement in F1’s takeover bid, he didn’t give a straight answer but without denying. Once the proposed takeover deal is concluded, Formula One will have a Chinese owner. 

Seeing from the perspective of some insiders, the move is crazy considering the current difficult situation of F1, with a number of teams succumbing to or facing financial difficulties, and lingering concerns about the quality of the sporting spectacle. 

However, on the other hand, F1 is still believed to be the third biggest international sport event just after FIFA World Cup and Olympics in terms of size and popularity. Financial situation is not the most important factor when a sport is valued. We can get some clues from the Chinese Super League’s (CSL) RMB 8bn rights offer that financial situation is not the first consideration of CMC when an investment decision is made. 

RMB 8bn’s offer for CSL rights

Just weeks ago, Ti’ao Power, a subsidiary of CMC, won a five-year-deal to live stream CSL games in an RMB 8bn bid. The figure is equivalent to more than 4 times of the money that has been paid by PPTV for the rights of La Liga and 2.5 times of NBA by Tencent Sports in China. 

When commenting the deal, Mr. Li said:”as the most premium football event in China, CSL is a very valuable sport resource. It’s worthy to invest hundreds of millions. It still has a very large room for the growth of its value. The heavy investment in CSL represents our confidence in Chinese sports industry.”

Cultivate domestic sports market

Before the CSL rights acquisition, CMC also signed a deal with Chinese Football Association to produce and broadcast games of Team China. Recently, the company announced an investment into EUMEDIA, the exclusive agency to run the China University Football League (CUFL). 

Li said:”the development of pro league sports and collegiate sports is mature in west countries, but it’s still at the primary stage in China. Our rule is not merely an investor, but we should be a cultivator to development the market and focus on the operating side of sports.”

Future plans

After the reform plans was released by Chinese central government, many Chinese companies including Wanda Group, Alibaba, LeTV Sports and Tencent began to speed up their investment into the market. 

Li said:”we have our own investment plans which are different with others. We will continue to expand our sports rights portfolio. At the same time, we will invest in other areas including sports event development and operation, player representing and sports merchandising.”

Source: Sohu

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